Major global trading houses are planning to reduce crude and fuel purchases from Russia’s state-controlled oil companies as early as May 15, sources said
The EU has not imposed a ban on imports of Russian oil in response to Russia’s invasion of Ukraine, because some countries such as Germany are heavily dependent on Russian oil and do not have the infrastructure in place to swap to alternatives.
Traders are wrestling with what “strictly necessary” means, the sources said. It may cover an oil refinery receiving Russian oil through a captive pipeline, but it may not cover the buying and selling of Russian oil by intermediaries. They are cutting purchases to ensure they comply by May 15, when EU restrictions take effect.
Vitol, another big buyer, declined to comment on the May 15 deadline. Vitol has previously said traded volumes of Russian oil “will diminish significantly in the second quarter as current term contractual obligations decline,” and it will cease trading Russian oil by the end of 2022. Rosneft and Gazpromneft volumes accounted for 29 million barrels, or nearly 1 million barrels per day in April, which is over 40% of overall Urals crude oil exports from Russia’s western ports in April, according to the loading plan.
Energy trading firms face compliance and reputational risks from the current raft of Western sanctions. They have to examine closely which entities they can pay as well as their employees’ nationalities. Also, the lack of an outright ban complicates ending existing contracts.
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